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Tepper Agrees With Zero Hedge, Sees QE3 Only If S&P "Falls Several Hundred Points"
As we have opined since January, when we predicted a major market swoon in the April-May timeframe, the only gating factor for more QE is a substantial drop in the market. As a result we predicted a telegraphing of a major economic slowdown to commence some time in April. We were off by a month. We also were off in anticipating just how stupid and obstinate the market is, as stocks continue to believe that QE3 will come in no matter what, yet it is precisely stocks, and nothing else in the economy, that will be the catalyst for more easing, thus leaving mutual funds in a conundrum of having to sell in order to generate profits. So far, few have been willing to push the sell button which will see many of them getting wiped out courtesy of record margin debt and record low cash balances. Earlier today we once again received validation of our outlook when David Tepper told CNBC that while he is skeptical on QE3 overall, "If (the S&P 500 falls) a couple hundred points and financial
conditions tightened maybe they would reconsider... there is no logic to QE3 now and the only result might be more food and
energy inflation." Once again, the only "logic" would be for Bernie "Madoff" Bernanke to look at his Bberg Screen and see the S&P under 1000. At that point he will have no choice. Absent that, the S&P will still drop to that level but in a very slow bleed which will see even more asset managers put out of business. Once again: game theory at its best...or worst, now that the whole "career risk" thing has been flipped and he who sells first keeps their job. We give the painfully inefficient market a few more weeks before they grasp this.
From CNBC:
The head of Appaloosa Management and source of the "Tepper Rally" that generated a huge run in the market last September said in an email to CNBC that stocks would have to fall considerably more before the Fed would start another round of quantitative easing, or QE.
The market has been rife with speculation since a 6 percent drop in stocks on whether the Fed, faced with persistently high unemployment and a double-dip in housing prices, would step in with more easing.
But Tepper told CNBC that the fall in stocks since the May 2 post-financial crisis high was "not enough of a drop" to bring the central bank in off the sidelines. QE2 is set to expire at the end of June with the last of $600 billion in Treasurys purchases.
He also said that further easing might only spur more energy and food inflation, meaning the Fed has to "let it ride" for now.
As such, he expects tough sledding for stocks ahead.
"We (are) in a difficult investment environment," he wrote. "Short and Sweet."
QE 3 will come: it is just a matter of time. The only question is how it will be telegraphed. Keep an eye on the usual "oracles" of the Fed to facilitate us in that regard.
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Any chance this guy will get taken out by another pimp?
One can only hope (and change).
Most of us Zero Hedge readers will be taken out of the market before he gets taken out. After all, he was one of the very few who was bullish on both gold and stocks in the summer of 2010.
Some form of additional monetization by the Fed is coming, whatever they call it, and in whatever amount is possible, depending on how bad things get, and they are about to get bad (this isn't a forecast for a specific timeline, though I'd make the claim we'll see many standard deviations from the mean events within a couple of years, and I'd say sooner rather than later in that window, even with an election year approaching - it's no longer about what they want to do, but what they are able to do).
The relevant question is whether it will have the same, less, no or negative net effects on bond, equity and commodity markets, rather than the positive ones associated with the past round.
The economy is being literally propped up by massively inefficiently recycle BernankeBux, loaned by the Fed to the taxpayers, which is merely causing consumers and businesses (especially those not exposed to global markets) to be crushed by inflationary pressures, demand destruction (for goods, services and labor), savers to get crushed by ZIRP (as Bernanke has artificially supressed yields on savings) and is causing a very terrible economy (deteriorating further and faster again at this point) to starting to eat its own tail, in preparation to go further as it starves.
Bernanke is a genius, I tell you all (/sarc). His plan has allowed the organic economy to weaken considerably, spike inflation across nearly every category (including causing a very unnatural superboom in commodities), destroy not just private sector -- but now even government (and its only just begun) -- employment, and now he has the walls closing in on him (and our economy).
Yep. He was Time Magazine's Man of the Year for good reason. He was said to have saved us from a Great Depression.
Bernanke saved us from nothing. He exacerbated our problems, kicked the can, added to the U.S. Government Debt, entrapped more debt slaves amongst U.S. consumers and businesses, and merely delayed the Big Show, which is going to be a real tear jerker.
Instead of taking the medicine in 2008, knowing it would have meant more short term pain as the chemo was administered, there'd at least be a chance to get the cancer into remission or maybe even get on track to wiping out the malignant tumors for good, but nope, Bernanke administered Heroin, and told everyone that things were stable and would get better.
You're doing a heckuva job, Bernanke.
Probably he will be wrong about the qe3. Hes probably talking book which we will see is likely sold positions and gone short.
They won't let the market go to shit going into the 2012 election season.
Stock market is the last chink in the chain for this depression.
THE PLAN:
QE2 ends, so no one to buy majority of US debt.
Market crashes too, down hundreds of points in July/August
American's 401k goes down in value, sheeple panic.
US Gov is here to save you (ha!) and thus appropriates your 401k in September/October
401k is 'secretly' used as yet another PONZI scheme and buys US debt with it.
Banksters still having problems, so then QE3 in winter 2011
I'll go even further. TPTB know the only thing most sheeple know about the great depression is the stock market crashed and unemployment was high. So they've manipulated the market, created millions of gov make-work jobs, and phoneyed up the BLS numbers. See, we saved the day. Vote for us.
Is it not curious that the original Oracle was in Greece?
and it will...
and it will... be time to buy.
Clarky's history of Gold corrections.
How about today?
bulls will put a good fight....got to admire these guys... dont even know how to gamble w/ others people money...stupidity by design...
The stock market is the only thing that matters.
until it doesn't.
I would argue that the housing market is the first thing that matters. Housing will still take down the banks which means the counter action is for the Fed to print to buy ever MBS to bail out (again) the banks.
To counter the loss in perceived wealth of the consumer, because his house isn't a savings vehicle any longer but a hell hole of unpayable debt, The Bernenk is trying to offset that wealth destruction with a totally fictious run up in stocks.
The problem is he cannot only run stocks up but commodities as well with the spill over from the printing.
It all comes back to housing and that is deader that a doornail because of the double whammy of over building and declining demographics.
Bernenk is fucked because he cannot save us from the housing collapse and he is only making matters worse in his misguided attempt to buy time. Perhaps he's not just another stooge in the totalitarian takeover but a key player? The more I think about that the more I am convinced it's probably true.... you know Princeton and all.
Squatter's Rent - the new way to wealth!
+1, have been saying the same thing for years.
It is so insane that some average Joe investor has to factor in Fed policy to figure out what to do with their entire life's savings.
This has been the case for more than a year...and actually closer to two years. The insatiable search for any rationale at all for owning equities has meant that criminal syndicate Wall Street bankers have had to root for and game government intervention as their last ditch effort to prop up their business and encourage sucker fish to take equity positions off of their hands.
So much for the free market, which had been the true rationale for equities. The free market is now entirely impaired by the obvious Ponzi scheme now destined to fail. And remember, as it all falls apart, "no one can see this coming"...except for everyone with even a modicum of intellectual processing power.
Therein lies the issue that keep most average retail investors on the sidelines.
There is no "investing" with ZIRP and QE. Cheap money encourages, "animal spirits", and gambling.
Bingo, and thus is the crux of the problems for the 'knowing all & wise' monetarists.
There's no bubble to pass onto those who make all true bubbles possible, to wit, the sheeple. They actually are awakening to the scam, in varying shades of consciousness (some having a more clear vision and knowledge of how the game has been rigged, while others merely awakening to the fact that it's highly rigged, which is good enough), and they're not buying it.
Worse yet for the elite, they're more suspicious now that they're being gamed than ever before, and historically high records of Americans are confident that we'll suffer a "Great Depression" within a year, based on valid scientific sampling polls (nearly half of Americans polled by CNN stated this - 48%, which is unprecedented).
So, since our fractional reserve economy depends on increasingly larger issuances of debt and the growth of seeds into trees (however plastic they may be) that the new way to wealth is an easy path (i.e. a bubble), yet since more Americans than ever have come to believe they'll merely be the 'weak hands' to be burnt, and more importantly, since half of Americans not only have no confidence in economic improvement but actually believe a depression is soon to arrive, the Fed can do whatever it wishes - nothing it does will lubricate whatever we wish to think of as our 'organic economy' at this point, as the lubricant is confidence.
There can be no confidence, no matter what the media or government or Wall Street shills trumpet about "blah & blah" when there's very high structural unemployment/underemployment, a lack of wage growth & loss of benefits, truly high rates of inflation in inflexible goods, and a loss of any faith in the competency or integrity of political leaders.
America. It can't even produce another good bubble.
To those thinking this is long-term accretive to the wealth and well-being of emerging market economies, do a simple analysis, and take your favorite emerging markets, and compute how much of their growth is derived from U.S. consumption (whether directly, as in the case of Mexico or China, or indirectly, as is more the case of Vietnam or Indonesia - big transactors of commerce with China).
While the U.S. may not be as big a buyer of the output of many of these nations as in decades past, their levels of domestic consumption means they are many decades away, if ever in a few of these cases, from being able to to grow their economies given the loss of a consumer anywhere near as large as the U.S. on the global stage.
If you agree that few will be spared if the U.S. tanks, add Eurozone consumption to the mix when it comes to emerging markets, as the Eurozone, which consumes more than the U.S., will be hit hard in the wake of the U.S. tanking.
Claims that China, India, Brazil and Russia can thrive at a time when the U.S. tanks, which inevitably would bring down the Eurozone, is the stuff of pure fantasy.
And the moment that happens every fiat I have available is going directly into AGQ.
TZA up 25% in the past two weeks and should continue until QE3 announced.
Is it not reasonable to think that the PTB would want to administer a pre-emptive bitch slap to Ag before the certain pull back of stocks?
Or is that just being unjustifiably paranoid?
The bitch slapping is commencing now.
Damn, Double damn.
After reading the AGQ post, my gut was saying it would have been a good in and out opportunity for ZSL.
The action was all right before the open.
Could that have been played with a pre-market order? Any suggestions?
nonsense
QE3 will inevitably come because the financial system will be on the verge of folding again due to asset deflation
They have endless ways to funnel money to the banks. They'll probably call it RF1 or something else.
"They" say that the only way the TBTF lose if deflationary depression occurs. If so, you are quite right. Duration is now the big Q.
Agreed. FRB is making bets on how fast and how steep the fall is...I suspect they have a lot of trip-wires queued up to "manage" the drop-off.
Not to mention the fleecing of 401k's and pension funds on the way down.
it s on the verge of folding , right now
Speaking of CNBC where is Rick Santelli?
He is probably undergoing "Reality Disgorgement Therapy" again so as to better support the BlowHorn's [CNBC] true mission of carrying forward the false flag of criminal syndicate Wall Street banks.
They really need to get him on board the BTFD theory of "investing" as the markets commence their Plunging and Screaming phase.
I had to laugh, sure enough the Blowhorns had some idiot pimp saying this is a buying opportunity. Blah Blah Blah ...
No currency as ever been destroyed by deflation that I know of. I stand to be corrected if wrong.
All the rest is merely noise, just keep changing those electronic credit ticks for tangible assets how hard is this trade really?
who's gonna fund this: http://www.zerohedge.com/article/us-treasury-burns-90-billion-8-days
yet it is precisely stocks, and nothing else in the economy, that will be the catalyst for more easing,
Think about how twisted and bizarro-world this is.
The commentary is that we are addicted to the illusion of wealth so much that we will prop that up at the expense of any opportunity for real wealth creation.
Well, we're going to go into withdrawal and the shakes are going to be fierce...
Michael Ruppert laments:
My country is dead. Its people have surrendered to tyranny and in so doing, they have become tyranny’s primary support group; its base; its defender. Every day they offer their endorsement of tyranny by banking in its banks and spending their borrowed money with the corporations that run it. The great Neocon strategy of George H.W. Bush has triumphed. Convince the America people that they can’t live without the ‘good things’, then sit back and watch as they endorse the progressively more outrageous crimes you commit as you throw them bones with ever less meat on them. All the while lock them into debt. Destroy the middle class, the only political base that need be feared. Make them accept, because of their shared guilt, ever-more repressive police state measures. Do whatever you want
"The American Way of life is not negotiable."
Of course, nor is it sustainable.
Correction: the S&P will drop, but more likely not in a very slow bleed. When this shit happened last year, post-QE1, we got the Flash Crash. Also, let's not forget the time-tested truism (regardless of QE schedules):
Escalator up......ELEVATOR down.
Agreed. I'm thinking the down will be more like Wile E. Coyote falling off a desert butte...
http://www.youtube.com/watch?v=mbOqg373faE&feature=related
This looks like an ugly day. Notice how most of the time the averages hide the carnage behind the scenes. Looks like a good day for the bears and gold continues to correct, now down 13 bucks.
Confetti makes sense here, gonna be some great opportunites in miners a little down the road.
And this says it all on employment.
NYTimes:
Companies Spend on Equipment, Not WorkersCompanies that are looking for a good deal aren’t seeing one in new workers.
Dan Mishek of Vista Technologies said Vista spent $450,000 on new technology last year, while it hired two new workers.
Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people.
“I want to have as few people touching our products as possible,” said Dan Mishek, managing director of Vista Technologies in Vadnais Heights, Minn. “Everything should be as automated as it can be. We just can’t afford to compete with countries like China on labor costs, especially when workers are getting even more expensive.”
Looks like these forecasts of DJIA 2011-2012 just get better every day:
April 26 with a link to Feb 6th forecast:
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&st=0&sk=t&sd=a&sta...
Hmmm. Let's see. Yesterday there was an article about how 22-30% of 401Ks (Mostly in mutual funds) are being pawned by cash strapped Americans. And today here's an article about how QEx will be implemented if/when the S&P falls below 1000. I see a correlation here, do you?
When I worked there, the older South Koreans had a saying about foreigners who came ostensibly to "help" them in the past: That the same people who came to cure what ails the nation gave them the disease in the first place. So, it appears that Bernanke will play the hero after he decimates the markets.
Rising oil prices, static demand, rising unemployment, decreased output, and increased gulf between the wealthy and the rest. All it needs is a tiny spark for a conflagration to engulf the whole military industrial complex. I won't be sorry to see it go, but wish individuals luck in the coming months, as I wish my own troubled continent on this side of the Atlantic pond luck in dealing with the aftermath.
Ha, ha, ha. Well then, fiat, so to speak.
I would be happy with S&P 1200 at this point, though S&P 1000 would be awesome.
I think in that corner of econ that is the Fed they have created good balance sheets for many econ entities. Without demand, further creation is not warranted unless events challenge the balances once again.
Or they just want to gamble and keep interest rates at too low levels to see what happens. As in what else can they do?
The politically much maligned stimulus program was good for the companies. But due to the severity of the derivative meltdown, was inadequate. The contention that good outcomes will happen anyway in the fullness of a year or two is not logical.
We actually need a shift in tax collections to those that did benefit from the trillions and force the good balance sheets to produce and hire. These programs should be targetted, and increase our resources and efficiency as a nation.
Never underestimate the Oligarchy...I can see a S&P rally in August after a three month period of doldrums as the Fukushima/Japan, Euro/PIGS and US debt ceiling debate unwinds...
From their perspective August 2011 will be the KEY Decision Making period; for either priming the QE-3 pump or for finding other ways...more sinister...to kicking the can...by hotting up the repression against civil unrest in West, OR, by turning on the screws in the MENA turmoil around the SACRED OIL PATCH.
That is the JERUSALEM of Western World for the NEXT THIRTY YEARS. NEVER FORGET THAT. WE LIVE AND WE DIE FOR THAT...The rest is simply literature, salad dressing...and the Oligarchy can handle it. In their own specific way, whether it means tightening belts or breaking heads... its no big deal...Then we will enter the turbulence of the run down to Nov 2012 and the re-election. When the Oligarchy choses its game plan for the Deflationary Cycle. Keeping in mind that the Oligarchy mix, if we exclude the WW3 scenario, will mean hard times for US/EU and its people in a way never seen before, after 2013. Those who run the multinationals running world capitalism have their own front men and their replacements all lined up; ready to be primed at election time by the sheeple of the West. China of course has its own inbred Oligarchy which is now WORLD COMPATIBLE, like Russia and the other BRICS.
Go long South America...
thanks ZH, for all you do. won't see this mentioned too many other places.....
Any second now, the BlowHorn's [CNBC] Carter Worth is going to come on the air and explain that the VIX, despite massive manipulation and option suppression schemes, is moving through its "smoothing mechanism." Any minute now...
And any minute now, the BlowHorn is going to quit with its utterly irrelevant coverage of nothing to report that the market is coming unglued and is in danger of becoming entirely bidless...out of a sense of duty to the little guy out there who has been buying Netflix every day for two years, and not hearing that this is a GROSS, GROSS misallocation of capital. Any minute now...holding my breath...
And any minute now, Rick Santelli is going to come back from Reality Disgorgement Therapy, and the upcoming segment with the apparently shameless Duncan Niederauer is going to reveal that he has rediscovered shame and that he is unplugging the co located sheeple shearing, bid lifting computers in the room next to where he takes his afternoon constitutional, and also announcing that he is resigning.
Taking a deep breath now...and holding it...
Why is Frasier talking at CNBS?
S&P500 to hit 1100 by the end of June and then and only then QE3 to get the green light.
So, should I sell my Au/Ag in anticipation of picking it back up @ $1000.00 and $15.00?
I'm so sick of trying to figure out how to invest based on a sick, twisted and manipulated market.
Woah! That would be very ballsy. However, I am seriously considering the same.
I don't know about you, but I'm going to wait until the end of June (end of POMO schedule) to see what the latest round of liquidity does to the markets. I don't think we'll see any dramatic changes until then, but of course getting caught out when the manipulators change the rules would be very stupid. I don't want to sell my tangibles for fiat if I can possibly help it, but you are completely right to spot the opportunity.
Thanks for validating my thoughts. It's prudent of you to wait and see what happens at the end of June. However, without QE, I'm concerned the market may crash as quickly as it did in 2008. It may be hard to find buyers when equities and commodities are being hammered day after day.
Shit, it's all just a casino right now. Unless you're part of the FED's network, and know their intentions, it's just a guessing game. Perhaps I'll hedge my play, and only sell half my holdings. If I'm going to make this play, I think I want to make it while the markets are still relatively stable (read: mid-June).
Good strategy to hedge your bet, and of course you could be right about the speed of the drop post-QE. In fact you are much more likely to be right than I am, but let me explain why I am waiting.
As we know, traditionally commodities take a dive with equities - there are so many precedents that I've lost count, but with so many on the same wavelength and global demand coupled with falling value of cash, I am worried that gold won't dip at the same time, but go ballistic as equities tank. The trouble is, unlike the past, risk managers cannot just sit on their hands and do nothing because doing nothing is in itself a risk. As they see it unfold, there could be a shift into gold which will negate all the traditional predictions, and therefore leave those who sold early with losses.
It is a casino, so all I can do is wish you luck and hope it turns out the way you wanted.
Agree it is a casino but we've seen it before...PM's may go down w/ the mkt. Let them. It's a chance to double down on physical b/c we know the further the S&P falls the greater the likelihood of intervention. If S&P falls and physical doesn't then no worries if you own PM's. But we might as well play their game. If we're gambling on S&P falling and Fed intervention then out of the money calls on ES and SI may make sense the day QE3 is announced. Of course, OOM calls on SI assumes the comex remains viable and margins aren't raised to 90 or 100%....a risk too.
Don't be an idiot, be a savant.
Which means, don't EVER sell your physical silver and gold. Eventually you will need to trade some for goods in the collapsed economy.
However, that doesn't mean you can't buy an inexpensive, longish-term, far-out-of-the-money put option on silver or gold. THAT is the savant way to protect yourself. Why? Because "on paper" you lose a little money if gold and silver climb, which generates a small tax refund. However, if gold and silver crash, that option generates enough cash to compensate for the theoretical paper losses (you never lost any physical metal). You'll have to pay tax on that gain (unless you have other paper losses to offset), but you can take your nice juicy profits and buy lots more physical silver and gold at BARGAIN prices.
Also, understand this most crucial fact. You will NEVER, EVER sell your gold or silver. Never. Eventually you may exchange it for other goods, but that's an even trade with zero tax consequences (or reporting, much less knowledge by the predators-that-be and predator-class).